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					November 24, 2008   FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos




                         November 24, 2008


                         Supermercados Peruanos S.A.
                         SPSA/BVL
                         Supermercados Peruanos Performance
                         •	   2007 was a year of historic growth for Supermercados Peruanos, as well
                              as a year of significant achievements. They were pioneers in entering
                              provinces and, because of that inroad, they won the Great Business
                              Award for Creativity.
                         •	   In July of that year, they opened Plaza Vea Trujillo, Plaza Vea Chiclayo
                              in October; and Plaza Vea Arequipa in December, surpassing significantly
                              in all of the cases the estimated sales for each project. This confirms
                              the confidence that the company has the potential development of the
                              supermarket industry in Peru.
                         •	   2007’s billing was S/.1’315 million, representing a growth of 22%
                              compared against 2006. In addition, net profit for the period was S/.11.9
                              million, equivalent to 3.1 times the net profit obtained the year before,
                              representing an improvement of S/.8.1 million compared to net profit
                              reported in 2006.

                         Company Valuation
                         Valuation Method by Free Cash Flow: net present value of the company
                         S/.281’522000 (USD 90’989657); discounted with a WACC of 4.78% quarterly.

                         Company Quick View:
                         Location: The corporate offices are located in San Borja, Lima-Peru.
                         Industry: Retail.
                         Description: Company engaged in the buying and retail sale at general level
                         of consumption and for the home.
                         Key Products & Services: Food, beverages, personal care and cleaning items,
                         hardware store, toyshop, appliances and technology, prepared foods.
                         Web Site: www.supermercadosperuanos.com.pe

                          Analysts:                                             Investment Research Manager:
                          Alexandra Ávila                                       Eduardo Court
                          alexandra.avila@pucp.edu.pe                           ecourt@pucp.edu.pe
                          Silvia San Miguel
                          ssanmiguel@pucp.edu.pe                                Adviser:
                          Elvis Ramírez                                         Elizabeth Girón
                          elvis.ramirez@pucp.edu.pe                             mgironm@pucp.edu.pe

                          The BURKENROAD REPORTS PERÚ are produced solely as a part of an educational program of
                          Tulane University’s A.B. Freeman School of Business in conjunction with CENTRUM Católica School
                          of Business. The reports are not investment advice, and you should not and may not rely on them in
                          making any investment decision. You should consult an investment professional and/or conduct your
                          own primary research regarding1   any potential investment.
FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos   November 24, 2008


SUPERMERCADOS
PERUANOS S.A.
SALES EVOLUTION




                              Figure 1: Sales Performance
                              Note: Retrieved from www.aai.com.pe



INVESTMENT                    With the method of Free Cash Flow resulted in a net present value of the
SUMMARY                       company S/.281’522,000. The flows are discounted with an average rate of
                              4.78% quarterly, matching the estimate of the Weighted Average Cost of
                              Capital (WACC). To get the WACC, it was considered the cost of debt and
                              the cost of capital, without taking into account the beta of the industry. In
                              addition, the cost of capital was obtained by the amount of risk-free rate plus
                              the premium market (market risk unless the risk-free rate). In the market
                              risk, it was considered the annual change in the General Index of the Lima
                              Stock Exchange.

INVESTMENT                    The results of the strategic changes, initiated since the Interbank Group
THESIS                        joined the shareholders of Supermercados Peruanos S.A., have helped to
                              build gradually, especially in 2007, higher sales growth, increased generation
                              of operating results and net profit, and an improved financial structure in
                              terms of indebtedness, profitability, liquidity and operational efficiency.

                              All this confirms a positive outlook for the coming periods: the increasing
                              dynamics of the supermarkets’ sales have reached the adequate growing
                              perspectives due to the expansion plans of the leading reatailers’ chains, and
                              the possible entrance of new operators, attracted by the low penetration level
                              on this modality of retailing sales in the local market. On top of this, it must
                              be added SPSA’s expansion projects.

INDUSTRY                      The peruvian economy continues to present a positive development in
ANALYSIS                      macroeconomic terms. According to the Central Reserve Bank of Peru (BCRP)
                              for the year 2007, the GDP growth was 9%, while domestic demand rose by
                              11.6%. Such economic expansion is also reflected in sales through modern
                              retail channels. For instance, Wong and Metro, Supermercados Peruanos and
                              Tottus, have accumulated an increase of approximately 30% during 2007.



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November 24, 2008   FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos


                         Table 1: Global Demand and Supply (actual percentage changes)




                         Note: From the Central Reserve Bank of Perú

                         According to statistics from the National Institute of Statistics and Information
                         (INEI), Peru is in the process of recomposition in favor of the socio-economic
                         sectors, where sectors B and C have shown a growing trend, while sector D
                         has decreased. This development has led an improvement in the purchasing
                         power of the population of fewer resources, which until recent years was very
                         poorly served by the supermarket chains. In this context, the expansion of
                         coverage of the supermarket business represents an opportunity, even more
                         so when it is observed the low level of penetration of these in the Peruvian
                         market compared with other Latin American countries.

                         The increase in the population consumption has led to sales growth of
                         supermarkets, which have joined new local chains, both in Lima and in
                         provinces, to meet the increasing demand. In Lima and Callao, it has been
                         estimated the level of penetration in 30%, while in provinces penetration
                         levels are still low. However, it is considered to have high expectations given
                         the growth in the employment level.




                         Figure 2: Share Market Evolution
                         Note: Retrieved from www.aai.com.pe



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FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos   November 24, 2008


                              Economic growth in the inner cities, driven by export growth, has turned
                              several cities (Trujillo and Ica, for example) into attractive places to investors
                              of local services and real estate.

                              In 2007, the total number of stores of major supermarket chains rose to
                              101, while in 2006 it was 88. All three competitors were aggressive in their
                              investments and openings of stores to expand their activities and gain greater
                              market share.

                              Insofar, the sector has achieved an important development, consolidating
                              the supermarket industry in the Metropolitan Lima area around three main
                              players: Supermercados Wong, with an average market share of 60%; SPSA,
                              with 27%; and Hipermercados Tottus, with approximately 13%. In provinces,
                              regional chains have developed.

INDUSTRY                      The low penetration of supermarkets in the country, a growing domestic
STRUCTURE                     demand and an incentives policy for private investment by the Peruvian
  Threat of New Entrants      government, puts Peru in the view of major foreign investors. For example,
                              the Fallabella Group of Chile made its only supermarket project in Peru.
                              At the same time, it underlines the acquisition of Supermercados Wong
                              conducted by the Chilean group Cencosud.

                              As a result, the entry barriers for new comers into the grocery industry in
                              Peru are very low. It only depends on the investment capacity of the investor
                              group.

     Bargaining Power of      The negotiation scheme with suppliers is based on contracts without
               Suppliers      compromise of charges or penalties for breach of terms. It gives a low
                              level of negotiation to suppliers because of the high purchasing power of
                              supermarkets.

     Bargaining Power of      The supermarket industry has consumers with more information and they
                 Buyers       demand better prices, greater variety of products and services, as well as a
                              friendlier environment and personal attention. As a result, the bargaining
                              power of buyers is medium, as the supermarket sector has a challenge
                              to attract consumers accustomed to purchase its traditional products at
                              warehouses in the neighborhood or district supply markets.

      Threat of Substitute    In the supermarket sector, there are substitutes such as: (a) grocery stores,
                 Products     which are traditional and highly personalized at understanding the details
                              of daily purchases and tastes of their customers; (b) market supplies, places
                              where the consumers negotiate the price of products; and (c) informal
                              markets, commonly called “flea markets”, where there is no security on the
                              origin of the products they offer.

                              These substitutes are the main reason why the penetration level of
                              supermarkets in Peru is the lowest in South America.




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November 24, 2008   FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos


Rivalry Among Existing   The intensity of the rivalry between the supermarket chains in the country
           Competitors   is increasingly higher. This is evident in the need to capture more customers
                         by diversifying products and services. Consequently, all supermarket chains
                         are constantly innovating with new formats (known as hypermarkets, which
                         offer a wide range of products), and expand their market share through the
                         entrance to major cities nationwide.

                         In addition, the supermarket chains in Peru maintain strategic alliances with
                         various companies, to provide greater convenience, service and satisfaction
                         to their customers, while ensuring a continuous flow of them. These alliances
                         include partnerships with food companies, banks, and pharmaceutical
                         companies, among others. Also, the supermarkets benefit from additional
                         income, since in most cases the space occupied by the associated companies
                         is rented.

COMPANY                  Supermercados Peruanos S.A., a Peruvian company, was formed as a limited
DESCRIPTION              company on June 1st, 1979, under the trade name of Promociones Camino
                         Real S.A. In 1993, the supermarket was sold to Santa Isabel, a chilean group,
                         and the company started to operate as Supermercados Santa Isabel S.A.
                         The chain grew during the nineties by acquiring the stores of Mass and
                         Top Market. The leasing of the San Jorge supermarket consolidated it as the
                         second supermarket chain in Peru.

                         Later, the Dutch group Royal Ahold, the third retailer in the world, became
                         co-owner of Santa Isabel S.A., and was increasing its participation until they
                         assume full control of the company. Under the administration of Ahold,
                         the company successfully launched the format of hypermarkets Plaza
                         Vea; however, the group decided to sell its operations in South America.
                         Royal Ahold sold Supermercados Santa Isabel S.A. to Interbank Group
                         (Banco Internacional del Peru S.A.-Interbank and Interseguro Compañía
                         de Vida S.A.) and Compass Capital Partners Corporation. They purchased
                         all the shares and gave them the financial backing and prestige necessary
                         to continue the expansion process initiated by Ahold. The General Stock
                         Holder Meeting decided to change the name of Supermercados Santa Isabel
                         to SUPERMERCADOS PERUANOS S.A.

                         In 2005, the company opened its first Vivanda supermarket in Pezet Avenue
                         located in San Isidro, a level A district. Between 2005 and 2006, the company
                         opened 4 Vivanda stores, other Plaza Vea stores and the creation of Plaza
                         Vea Super. In the same year, Supermercados Peruanos reached a market
                         share of 29%. Since 2006, the company has grown through the construction
                         of new stores, both in Lima and in provinces; and, in some cases, remodeling
                         existing stores to better meet the needs of its customers.

                         In 2003, the General Stock Holder Meeting of Supermercados Santa Isabel
                         S.A. registered shares representing the capital stock in the Lima Stock
                         Exchange and in the Public Register of the Securities Market. The capital
                         stock of the company was One Hundred Forty Million Five Hundred Sixty
                         Six Thousand Eight Hundred Nine and 00/100, Nuevos Soles represented by


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FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos   November 24, 2008


                              140’566,809 common shares with voting rights and a nominal value of to
                              S /. 1.00 each one.

 Company Business and         Supermercados Peruanos S.A. is dedicated to the business of buying and
             Products         selling movable at a general level, the current product lines are:

                              Table 2: Product Categories
                              Meat, fish and poultry                     Bazaar
                              Fruits and vegetables                      Library
                              Sausages, cheese and meals                 Pets
                              Groceries                                  Hardware
                              Beverages, liquors, snacks                 Textiles
                              Personal care                              Toys and recreation
                              Baby care                                  Appliances and technology
                              Household cleaning                         Prepared foods
                              Note: Retrieved from www.supermercadosperuanos.com.pe

                              Each category has a role, vision, goals, strategies, policies of exhibition range
                              and price; every one works separate documents, just as each section has a
                              head of product, a category leader and assistant specialist, giving them an
                              aura of personalization and specialization.

                  Brands      Supermercados Peruanos S.A. has 5 brands of white products (own brands):

                              1) Bell’s and Sulli: foodstuffs and household
                              2) A-selection: textile products
                              3) Brio: cleaning products
                              4) La Florencia: vegetables, milk and sausages
                              5) Nube: paper products

                              These brands are produced through outsourcing, with the company’s
                              specifications and designs.

                              To accommodate the Peruvian purchasing behavior, Supermercados Peruanos
                              has created platform formats adapted to different types of consumers in the
                              country, intended to cover their needs for closeness and price; it features
                              what Peruvians are looking when purchasing. Their formats are divided into
                              three categories: hypermarkets, supermarkets and discount stores.

Plaza Vea Hypermarkets        Hypermarkets Plaza Vea and Plaza Vea Super are the best-known brands, the
    and Plaza Vea Super       most effective and the most widespread of all those created by this company.
                              In 2007, it has opened the first stores in the cities of Trujillo, Chiclayo and
                              Arequipa. Plaza Vea is also certified by ISO: 9001; it is the only supermarket in
                              Latin America that possesses such certification. This brand of hypermarkets
                              is the second in the preference of sectors A / B, but the third in sectors C and
                              D. Purchases with its own credit card that allows its customers access to
                              exclusive benefits.



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November 24, 2008         FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos


                   Vivanda Vivanda is the second-largest brand in Supermercados Peruanos. It has
              Supermarkets six stores in the province of Lima, in the districts of San Isidro, Surco,
                           Magdalena and Miraflores. They cater the upper social classes A and B. It
                           is more appreciated among women ranging from 17 to 25 years, as well as
                           executives and entrepreneurs. Also, it is the only supermarket in Peru that
                           has a store open 24 – 7, located in Miraflores district, in Lima.

         “Mass” Discount “Mass” is a small market located in places like Chosica and Magdalena; there
                   Stores are eleven stores with small areas. There are future plans to form a larger
                          supermarket, aimed to target groups of socioeconomic status C and D.

          Stores by Format Supermercados Peruanos S.A. has 48 locals:
                              • 21 Plaza Vea hypermarkets
                              • 6 Vivanda supermarkets
                              • 7 Plaza Vea Super supermarkets
                              • 2 Santa Isabel supermarkets
                              • 11 Mass discount stores
                              • 1 San Jorge Market

                               There are hypermarkets Plaza Vea in Arequipa, Chiclayo, Trujillo and
                               Piura.

                    Strategies The business strategy of SPSA is based on the change of format of its stores.
                               The expansion of its operations and the financial backing provided by the
                               shareholder, Grupo Intercorp, ensures the necessary resources to further
                               the expansion of a strong managerial group and extensive experience in the
                               industry.

                               During the years 2004 and 2005, the company’s strategy was based on the
                               definition and consolidation of its formats, culminating with the launch of
                               the new brand Vivanda, the transformation of the stores Minisol into Mass,
                               and a profound improvement in quality and services of Plaza Vea.

                               The business strategy of the Company has determined that the stores that
                               are currently operating under the format of Plaza Vea Super are converted
                               during the 2008 into the Vea format. At the same time, it will offer the Vea
                               card that gives its customers the capacity to buy products on credit from
                               their stores.

                               It is important to mention that the introduction of values in the organization
                               as transparency, commitment and spirit of improvement, teamwork, sense
                               of humor and social responsibility, has contributed to the success of its
                               operations.

                               SPSA has people specializing in each of its product lines; their business
                               is divided into small units. The corporate strategy consists in negotiating
                               volume purchases of supplies for all its supermarkets.




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FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos   November 24, 2008


CUSTOMERS BY                  There are two large groups’ stores: Plaza Vea La Molina and Caminos del
SEGMENT                       Inca, where they attract groups A and B; and a second set of stores, such as
         Plaza Vea            Plaza Vea Brasil and Plaza Vea Risso, catering groups B and C.

                              Their customers come from socio-economic levels A, B and C, with incomes
                              that allow them to access more expensive products and services. Class A is
                              located in Surco, La Molina, Miraflores, San Isidro and San Borja. Class B
                              lives in traditional districts like Jesus Maria, Lince, Pueblo Libre, Magdalena
                              and San Miguel. Class C is located in San Martin de Porres, Los Olivos,
                              Rimac, Breña, La Victoria, Chorrillos, San Juan de Miraflores and around El
                              Callao.

                              There is a group of customers, belonging to the so-called “middle class
                              traditional two” of Lima, which has experienced a decrease in their purchasing
                              capacity because of the pressure to incur in some expenses to maintain their
                              “social status”; the majority has access to credit card.

                              In recent years, customers levels D to level B and C buy much more in
                              supermarkets. A good segment corresponds to merchants or entrepreneurs
                              that obtain personal formal or informal income in cash; they do not pay rent
                              because they own their home (with or without title deed). As a result, they
                              have greater consumption. Customers from Plaza Vea Super resemble clients
                              of Plaza Vea, with the exception of some stores such as Plaza Vea Super Valle
                              Hermoso or Dasso, which have more clients of level A.

                   Vivanda    Customers come from socio-economic level A or B; but predominantly A.
                              The money available for consumption is high, and, additionally, most of
                              them have access to credit cards.

         Market San Jorge     Predominant customers come from socio-economic levels C and D. Their
                              availability for consumption in cash is limited, for that reason they seek the
                              lowest price. Customers of the socio-economic level D are located in the
                              districts of San Juan de Lurigancho, Ate, Lurigancho, El Agustino, Villa El
                              Salvador, Villa Maria del Triunfo and Lurin.

                              Table 3: Segmentation of Consumers




                              Note: Based on SPSA data




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November 24, 2008    FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos


         SWOT Analysis




                          Figure 3: SWOT

PEER ANALYSIS             The main competitors of Supermercados Peruanos are Wong and Metro,
                          owned by Cencosud. They operate under 3 formats (Wong, Metro and ECO),
                          while Hipermercados Tottus operates in one format only.

             Wong Group   Wong Corporation is the Peruvian’s largest group targeted for direct sale to
                          consumers with presence in Lima and Trujillo. It has 48 stores among its four
                          formats: Wong, Metro, Eco and American Outlet.

                          Today, they have 32 stores operating under the brands “Wong” (12
                          supermarkets), “Metro” (8 supermarkets and 10 hypermarkets), “Eco” (a
                          warehouse store) and “American Outlet” (2 stores).

                          The main competitor for Vivanda and Plaza Vea Super is Supermercados
                          Wong.

                          Hipermercados Metro was inaugurated in 1992, with a format never seen
                          until then. It had wider product presentations and more affordable prices.
                          This format competes with Plaza Vea’s format.

                          American Outlet was created with the aim of offering products with the best
                          brands international but with a reduction of the original price up to 70%.
                          Group E. Wong opened American Outlet discount store located in Plaza
                          Camacho Shopping Center. Wong Group does not have competitors in this
                          area; Supermercados Peruanos has no stores of this format.




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FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos   November 24, 2008


          Hipermercados       Hipermercados Tottus is a company incorporated in Peru in 2002. It was
                 Tottus       created as a result of the expansion of Saga Falabella, who ventured into the
                              category of hypermarkets through HIPERMERCADOS TOTTUS.

                              In December of the same year the company opened its first store: TOTTUS
                              MEGA PLAZA. In November of the following year, Tottus opened its second
                              store, in the most commercial area of San Isidro: TOTTUS LAS BEGONIAS.

                              In 2004, Tottus opened its third store in San Miguel: TOTTUS LA MARINA.

                              In 2008, Tottus determined to implement its growth through a fairly ambitious
                              plan that included opening in several provinces in the country.

                              In a short time, and with a small number of stores, Tottus has managed to
                              obtain access in the market and a highly competitive position, currently
                              taking a 14% of market share. Each Tottus is 10 or 12 thousand m2 unlike
                              stores from Supermercados Peruanos whose stores only have from 4 or 6
                              thousand m2.




                              Figure 4 : Market Share
                              Note: Retrieved from www.equilibrium.com.pe


     Peer Ratio Analysis      The analysis of the ratios of competition has been conducted without taking
                              into account Hipermercados Tottus, because it has short market share. From
                              the year 2005, SPSA showed a growing trend in its revenues as a result
                              of the increased number of locals in operation, and the commercial and
                              operating relaunch of the company in 2004, when the group entered with
                              the INTERBANK shareholders.

                              During the 2007 period, SPSA earned sales revenue amounting to S/.1,313
                              million, 21.7% higher than the figure obtained in 2006. The improvement in
                              gross margin and the relative decline in the costs of administration, sales and
                              depreciation, operating income has shown an improvement, amounting to
                              S/. 24.3 million in 2007, surpassing by more than twice as recorded in the
                              past two years.


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November 24, 2008   FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos


                         Table 4: Peer Ratio Analysis




                         Note: Based on SPSA data


MANAGEMENT               Supermercados Peruanos S.A. shows independence in its directory, formed
BACKGROUND &             by managers from the first line of the Interbank group. The committee of
PERFORMANCE              the Supermarkets directory is not influenced by managers in its decision-
                         making. The directors are independent of any operational decisions, unless
                         they are consulted. The committee is composed by:

                         Directors:
                         President (*):             Carlos Rodríguez Pastor
                         Vice President:            Juan Carlos Vallejo
                         Director:                  David Fischman
                         Director:                  Manuel José Balbontín
                         Director:                  Julio Luque Badenes

                         The 1% of the staff of SPSA works in the central administrative and
                         management of the company. The aim of the management of SPSA is company
                         revaluation; that is, greater value to shareholders of the company. Managers
                         have no involvement in the group, because they do not own shares in either
                         the group or in competition. SPSA has a policy to hire the best retail managers.
                         Most of the management staff is composed by foreigners or Peruvian staff
                         with studies abroad.




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FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos   November 24, 2008


                              Table 5: Board of Managers




                              Note: Retrieved from www.equilibrium.com.pe

                              There are no plans for management succession. The sequence is based on the
                              growth of the company. The vacancies are filled by the management through
                              external recruitment or relocation of jobs.

 Management Incentives        The policy of incentives for management is based on economic incentives
                              that vary depending on performance. The goals are negotiated with the
                              directors who have signed contracts of incentives. The bonds are handled
                              confidentially, and they are negotiated personally with managers (including
                              chiefs and analysts) through contracts based on the performance of different
                              objectives, depending on the position of the worker.

                              Managers must meet annual goals in order to receive the bonuses. In some
                              instances, they can double the fee, depending on the level of achievement of
                              the objectives.

                              The staff should reach annual goals. They are based on 10 indicators of the
                              store and 3 annual targets at group level, related to EBITDA, achieving a
                              position in the “Great Place to Work”, and sales levels in the group.

   Management Training        The company has no policy to finance management training. In special cases,
                              external training is given to some workers to fill a management position and
                              to coach them in accordance with the requirements.

     Return on Invested       Table 6 shows the ROIC of SPSA compared with its main competitor, Grupo
Capital Peer Comparison       de Supermercados Wong S.A.




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November 24, 2008   FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos


                         Table 6: Return On Invested Capital Comparison




                         Note: Based on SPSA data

                         The management of SPSA has clearly outperformed its peer group over the
                         past two years. The return on invested capital for 2005 of SPSA was because
                         the company recorded a net loss mainly related to exchange rate fluctuations.
                         Since 2006, SPSA shows a higher return on capital due to the expansion
                         strategy of increasing the number of new stores and the reformatting of Santa
                         Isabel stores. On the other hand, the performance sales of stores opened in
                         provinces have exceeded the expectations of the company.

SHAREHOLDER              The main shareholder of Supermercados Peruanos is IFH Retail Corp.,
ANALYSIS                 a subsidiary of IFH Peru Ltd., established in January 2007 as part of the
                         corporate reorganization of the Interbank Group holding companies.

                         By the year 2007, the composition of the shareholding structure of
                         Supermercados Peruanos S.A. is as follows:

                         Table 7: Capital Structure




                         Note: From SPSA Annual Report 2007

                         The shareholders, in order to revalue the company in time, make capital
                         contributions. The interests of shareholders are given by the incentives that
                         they agree with the management.

                         During 2007, IFH Peru Ltd., Interseguro, Compañia de Seguros de Vida
                         SA and Banco Internacional del Peru S.A.A. transferred its shareholding in
                         Supermercados Peruanos S.A. in favor of IFH Retail Corp. (IFH). Additionally
                         IFH conducted a capital increase amounting to a total of S/.62.6 million in
                         exchange for the issue of the equivalent of S/.77.3 million in shares, causing a
                         loss in the broadcast, which is reflected in the balance sheet at 31st December
                         2007. IFH now has ownership of 99.99999965% of the shares representing the
                         capital of SPSA, while IFH Peru Limited holds an action that represents the
                         0.00000035% of the share capital.




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FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos    November 24, 2008


RISK                          In keeping with the global trend, the strategy of Supermercados Peruanos
ANALYSIS                      S.A. (SPSA) is aimed at expanding its operations through the opening of new
                              stores. This measure implies a higher level of indebtedness, and will require
                              the company to obtain an optimal ratio between debt and assets, so that it
                              shows healthy growth and not deteriorate the fit between the generation of
                              cash and its commitments.

                              Taking into account that SPSA is “opening” market, especially in the
                              provinces, it must be considered that the entry of another competitor of
                              similar size could cannibalize sales.

                              An important factor to ponder is the effect of maintaining inventories in
                              this business, where storage costs are high and the inventories turnover
                              influences the liquidity of companies. On the other hand, due to the nature of
                              the business, working capital is financed mainly through suppliers. The high
                              turnout of short-term liabilities on its funding and its impact on liquidity is
                              a strong pressure on the deficit of working capital. But the administration
                              of obligations to suppliers has reduced the deficit in working capital of
                              S/.197.7 million in December 2006 to S/.-109.7 million in December 2007 at
                              the time that has increased the accounts receivable turnover by paying up
                              to 116 days. In December 2007 shows a significant improvement since the
                              deficit in working capital was reduced to 11% of annualized sales.




                              Figure 5: Working Capital Evolution
                              Note: Retrieved from www.equilibrium.com.pe on November 13,2009.

                              The period of payment of its suppliers’ obligations has increased in the last
                              years with accounts payable turnover average of 102 days in 2007, whereas
                              the one of his main competitor was 91days.

                              The net results of SPSA, due to the moderate operative margins, still exhibit
                              a high dependency on macroeconomic variables such as the variations of
                              the exchange rate, phenomenon characteristic in the supermarket industry.


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November 24, 2008   FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos


                         The SPSA incomes are mainly national currency and 40% of their passive
                         operations in foreign currency, reason why the net loss of year 2005 as the net
                         utility of year 2007 are strongly related to the fluctuations of the exchange
                         rate.

                         In the last three years, the supermarket industry has had intense dynamics
                         due to the entrance of new participants in the sector; the greater challenge of
                         SPSA has been to increase the geographic cover by optimizing its operative
                         scale and, thus, to strengthen its margins, to improve its economic results,
                         and their positioning of mark.

FINANCIAL                Projections for valuing the company came under the following
PERFORMANCE              assumptions:
AND PROJECTIONS
                         a) The long-term growth of the company’s average was taken of the change
                            in the trade sector’s GDP for the period from 1980 - 2007.
                         b) The cost of debt for the quarters of 2008 was considered equal to the
                            period 2007 to maintain long-term debt into bonds last for three more
                            years.
                         c) The investment in fixed assets (CAPEX) was estimated based on the
                            amount of investment activities that the company conducted on an
                            annual basis.
                         d) The rate of the cost of debt was taken from the average annual rates of
                            short-term and long-term debts, and then weighted it by the respective
                            amount of debts.




                                                    15
FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos                                                 November 24, 2008




                          Table 8. Valuing of Supermercados Peruanos S.A. (Discounted Free Cash Flow) – (In Thousands of Nuevos Soles)




                                                                                                                                         16
November 24, 2008                                                                                FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos




                    Table 9. Quarterly Projection of the Balance Sheet of Supermercados Peruanos S.A. (In Thousands of Nuevos Soles)




                                                                                                                                       17
     Table 10. Quarterly Projection of Profit/Loss Statement of Supermercados Peruanos S.A. (In Thousand of Nuevos Soles)




18
                                                                                                                            FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos
                                                                                                                            November 24, 2008
November 24, 2008   FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos




                                                    19
FINANCIAL REPORTS CENTRUM Católica - Burkenroad Latin America (Peru) - Supermercados Peruanos   November 24, 2008


The Burkenroad Reports are about listed companies´ financial analysis,
and small and medium Peruvian companies. They are made by CENTRUM
Catolica´s alumni, the Pontificia Universidad Catolica del Perú Business
School, and they are supervised by Finances, Economy and Accounting
professors of the School.

Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM),
Instituto de Estudios Superiores de Administración de Venezuela (IESA),
Universidad de los Andes de Colombia, Estudios Superiores Incolta de
Colombia (ICESI), Escuela de Postgrado de Administración de Empresas de
Ecuador (ESPAE), and the Universidad Francisco Marroquín de Guatemala,
in conjunction with Tulane University, develop the Burkenroad Program
in Latin America. This project is supported by the Multilateral Investment
Fund from the Inter-American Development Bank.

This program enriched the human capital by providing training in financial
analysis techniques, and also pretends to facilitate access to financial sources
by providing to institutions and investors with financial information.

These reports evaluate conditions and opportunities for investments in
companies. The listed companies´ reports are distributed to domestic and
foreign investors by using publications and financial information systems as
the Infosel Financiero and Finsat. The small and medium companies’ reports
are solely distributed to companies favored for being used in future private
presentations to financial institutions or potential investors. Invesment
plans and financial situation from the analyzed companies are shown to the
financial community in an Annual Meeting.

Additional information about Burkenroad Program, please visit the page
web: http://www.centrum.pucp.edu.pe/es/programaburkenroad/




Ph.D. Eduardo Court Monteverde               Magister Elizabeth Girón
ecourt@pucp.edu.pe                           mgironm@pucp.edu.pe
Research Director                            Coordinator
Burkenroad Peru Reports                      Burkenroad Peru Reports
CENTRUM - Business School of the             CENTRUM - Business School of the
Pontificia Universidad Católica del Perú     Pontificia Universidad Católica del Perú
Phone Nº: (511) 313 3400                     Phone Nº: (511) 313 3400




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